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Existence and efficiency of equilibrium in economics with increasing returns to scale: an exposition

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  • Antonio Villar

    (Universidad de Alicante and IVIE)

Abstract

The purpose of this paper is to offer an exposition of the results on the existence and optimality of equilibria when production sets are not assumed to be convex, in a general equilibrium framework. We aim at providing a formal and systematic account of the main results available, rather than survey the literature. Besides presenting an abstract model, where firms' behavior is described by general pricing rules, we analyze the family of Loss-free Pricing Rules (focusing on Profit Maximization, both constrained and unconstrained, and Average Cost Pricing), and the Marginal Pricing Rule and other regulation policies. Then, we discuss the efficiency problem, referring to both the first and second welfare theorems.
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  • Antonio Villar, 1994. "Existence and efficiency of equilibrium in economics with increasing returns to scale: an exposition," Investigaciones Economicas, Fundación SEPI, vol. 18(2), pages 205-243, May.
    • Handle: RePEc:iec:inveco:v:18:y:1994:i:2:p:205-243
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    Cited by:

    1. Peter J. Hammond & Antonio Villar, 1998. "Efficiency with Non‐Convexities: Extending the “Scandinavian Consensus” Approaches," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 11-32, March.
    2. Hichem Ben-El-Mechaiekh & Philippe Bich & Monique Florenzano, 2009. "General equilibrium and fixed-point theory: a partial survey," PSE-Ecole d'économie de Paris (Postprint) hal-00755998, HAL.

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